Independents' day

The relationship between independent bottlers (IBs) and the majors has all gone a bit hokey-cokey this year. One spring day you’ll find Glenmorangie divesting itself of the Scotch Malt Whisky Society (SMWS) to ‘a group of investors’ (a phrase which always fills me with a certain dread), then the next Bacardi is buying a minority stake in Compass Box. So, now that the dust has settled somewhat, what’s going on?

The SMWS sale makes sense. There has long been a camp within Glenmo' who a) wanted to get shot of the Society having b) wondered why they had bought it in the first place. Always an awkward fit, it had become increasingly out of step with the needs of a sleek LVMH company.

The Society was set up by a maverick – the great Pip Hills – to be a maverick. It wasn’t only different from the distillers, it didn’t even conform to the independent bottler model. Society bottlings were always extreme, quirky, different – difficult even. This iconoclastic stance was continued under the aegis of Richard Gordon, who brought a degree of stability after the fireworks of the original set-up, but it was still identifiably the Society.

Yes, it has got more ‘professional’ in recent years, there are more members, more overseas branches, the website is good, the bottlings have increased, it has acted as the training school for a remarkable new generation of brand ambassadors and distillers, but the underlying spirit has changed.

Changing spirit: the Scotch Malt Whisky Society

This is not to say that Glenmo' ruined the Society. It didn't. It has simply come to the realisation that it was an impossible fit within a (luxury) brand-oriented company. What’s next? We’ll have to wait to see what these shadowy investors have in store.

For them to succeed, they have to come to terms with the reality of being a successful IB – access to great stock. The Society, like most IBs, has had to bear the consequences of stock shortages. In recent years, access to Glenmo’s blending library put them in a better position than many in terms of volume, but they still faced the same reality faced by all IBs: the stock from closed distilleries had long gone, the stellar single casks which were around in the past were, seemingly, harder to come by.

Having good bottlings is fine, but in the long term, any IB business is built on having great ones. This is even more important for the Society as its members require whisky of a standard which justifies the membership fees. If you set yourself up as exclusive, then you need to come up with the goods. Are there sufficient great casks out there for a new-look, independent SMWS to prosper?

It’s stock which lies at the root of Bacardi’s deal with Compass Box. The latter is a throwback to a mid-19th century model of a whisky blender, in the days before those blenders bought distilleries.

Good relations with Diageo gave CB access to juice, but it was, inevitably, limited. Growing the CB ‘brand’ therefore was always going to be tricky, especially as the firm’s rate of expansion was greater than the liquid which was available to it. You can’t sell what you don’t have. Sticking with existing contracts restricted CB’s potential.

Dewar’s has stocks. Deep stocks by all accounts, and of a mix which CB can utilise and which will allow the firm to grow. Add that to the continuing Diageo agreement, and the fact that the firm is filling its own casks means it is, finally, ready to make a significant step forward.

While CB has been vociferous in its assertions that nothing has changed, it will be interesting to see how Dewar’s plays this. Will we see subtle briefings to the effect that CB is their innovations arm? Indeed, where does this leave Dewar’s innovations? What happens if both sides want specific stock?

Whisky politics: Compass Box founder John Glaser

The deal makes good business sense and is proof of CB founder John Glaser’s ability to play clever whisky politics but, while I have confidence in what he is doing, I suspect there will be some interesting times ahead.

Come to think of it, if Compass Box was willing to do a deal like this, one would presume that it would first have approached Diageo. If it did, then why on earth didn’t the big D act?

It’s hardly the misstep of letting Bushmills go, but it raises another question mark about its overall whisky strategy.